Latin America-based wireless communication company, NII Holdings, Inc. (NIHD) has issued $750 million senoir notes, which will mature in 2021. The notes were issued at par through its wholly-owned subsidiary NII Capital Corporaton and carries interest rate of 7.625%.
Earlier, the company had proposed to issue $500 million senior notes but increased it by another $250 million. The company plans to close the issue of senoir notes on March 29, 2011.
It is believed that the fund available from selling $750 million senoir notes will be utilised for expansion purposes like acquiring other telecom carriers or securing spectrum licenses. The available funds may also be used to repay or repurchase existing debts.
On December 14, 2010, NII Holdings won 11 of the 13 wireless licenses in Brazil for the 20 MHz wireless spectrum in the 1.9–2.1 GHz frequency band. NII Holdings has decided to deploy 3G wireless network to provide high-speed mobile broadband services including data and video transmission. Furthermore, the company is also looking for 3G network opportunities in other markets of Argentina, Peru, and Chile.
The company needs huge cash in order to support their massive expansion plans as well as to roll out its 3G wireless network. Moreover, the company has projected that capital expenditure for 2011 will be approximately $1.6 billion. Hence, we believe that their will be many such issue of senoir notes in the coming quarters.
Key competitors like America Movil (AMX) and Telefonica (TEF) are aggressively deploying next-generation wireless technologies in major Latin America markets. So NII Holdings needs to respond fast in order to catch up with its peers.
We, thus, maintain our long-term Neutral recommendation for NII Holdings, Inc. Currently, NII Holdings, Inc.has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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